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flag UK economy grows strongly in early 2025, but tax hikes and rate cuts loom amid weak investment and slowing labor market.

flag The UK economy began 2025 with stronger-than-expected growth, but faces uncertainty ahead, with KPMG forecasting 1.2% GDP growth in 2025 and 1.1% in 2026. flag Resilient consumer spending is offset by weak business investment due to trade policy uncertainty, high taxes, and rising public spending pressures, particularly in health and defense. flag Chancellor Rachel Reeves is expected to raise taxes in the upcoming autumn Budget rather than cut services, with gradual tax increases likely over the next decade. flag The Bank of England may cut interest rates before year-end due to slowing growth and a weakening labor market, with another cut expected in 2026, bringing the rate down to 3.25% by December.

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